Gazprom is having cash flow problems, which is why it turned to the Bank of China for a 2 billion euro loan this week. The FT reports:

The Russian state-controlled gas group agreed the five-year loan — one of the largest ever from a Chinese lender to a Russian company — with Bank of China’s London branch at a meeting in Shanghai on Thursday, it said in a statement. […]

When the deal with CNPC was signed, the Russian group said it hoped to receive a financing package — either in the form of prepayments for gas supplies or loans — worth $25bn to help it build a new pipeline, the Power of Siberia. But the deal never materialised, with people close to the negotiations saying that Beijing had pushed for interest rates that were higher than Gazprom was prepared to accept.The loan from Bank of China comes as analysts expect Gazprom to increase its borrowing this year in order to keep investing in its big projects — including the Power of Siberia pipeline to China and possible new pipelines to Europe including Nord Stream 2 and Turkish Stream.

Gazprom has seen better days, to say the least. Its historically pliant European customers have moved to diversify away from Russian supplies in recent years after Moscow’s aggression in Crimea and eastern Ukraine. LNG imports are on the rise in Europe, and with America only just now starting to ship out its own exports of shale gas, it will be difficult for Gazprom to reclaim the full marketshare they once held.

Moreover, natural gas prices are cheap these days—analysts expect Gazprom’s average selling price in Europe to hit a 10 year low this year. That’s because, as is the case with oil, there’s plenty of natural gas filling the global market. Also, natural gas prices are frequently linked to the price of oil in long-term contracts, a fact that while previously a point of contention for Gazprom’s European customers is now providing a discount. For the Russian company, however, it’s eating away at the ability to spend capital.In this context, it’s not surprising that Gazprom is looking for loans. We’re not privy to the details of this loan, but in those negotiations Beijing had to have had the upper hand. Gazprom was previously unable to secure billions in financing from China’s CNPC as a follow-up to 2014’s mega-deal because the terms weren’t sweet enough for the Russians. Now, it looks like desperation may have forced Gazprom’s hand.

Unlike all too many of TAI’s posts on the subject of oil (about which pretty much everything that can be said has been, repeatedly), the report that Gazprom has been forced to go cap-in-hand to the Chinese is significant.